REC Drops to Record as Danske Cuts Earnings Outlook: Oslo Mover
Renewable Energy Corp. (REC), the Norwegian solar manufacturer that’s been unprofitable for the past six quarters, slumped to a record in Oslo trading after Danske Bank A/S (DANSKE) cut its earnings estimates for the company.
REC fell as much as 6 percent to 1.551 kroner, the lowest since the shares started trading in May 2006. The stock was down 5.3 percent as of 12:28 p.m. local time, the biggest decline among companies on the Oslo exchange’s benchmark OBX Index. (OBX)
REC, like European peers Solarworld AG (SWV) and Q-Cells SE, is under pressure from Chinese competitors that expanded just as demand slowed, causing solar-wafer and cell prices to plummet. Cuts in renewable-energy subsidies in France, Italy and Germany have also reduced sales for the Sandvika-based manufacturer.
“We lower our estimates ahead of the third-quarter report to reflect the continued price decline throughout the value chain,” Danske Bank said today in an e-mailed note to clients. “We maintain our sell rating and 12-month target price of 1.7 kroner. We see structural challenges persisting.”
Spot prices for polysilicon, the main raw ingredient in solar cells, have tumbled 27 percent this year. REC, due to report quarterly earnings in two weeks’ time, will probably post a loss of 132.2 million kroner ($23 million), according to the average estimate of eight analysts surveyed by Bloomberg.
The company has sought to bolster its finances by cutting costs and reducing output capacity to adapt to falling demand. In July, it raised 1.3 billion kroner through a share offer.
Global investment in renewable energy fell 20 percent in the third quarter from a year earlier as the pace of spending eased in the U.S. and India, Bloomberg New Energy Finance said yesterday. Annual investment may fall for the first time in eight years, the London-based researcher said.
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